Company Analysis - AstraZeneca
The Current Outlook
Comparing AstraZeneca’s pipeline with GlaxoSmith-Kline’s current projects (Graph 1 & 2) clearly highlights the dearth of late-stage drugs AstraZeneca is currently suffering from. 
Despite the two companies having a comparable number of compounds in Preclinical – Phase III development (AstraZeneca has 159 to GSK’s 176), only 22% of AstraZeneca’s projects are in Phase II-III compared with GSK’s 49%. This discrepancy could cause financial difficulties for AstraZeneca over the next few years as it progresses its abundance of early-stage compounds through to later phases of development – an expensive and timely process. This late-stage deficit is reflected in AstraZeneca’s pipeline over the last four years (Graph 3). Although the number of compounds moving from preclinical investigation into the clinic has shown some improvement in 2007, crucially, the number making it past clinical trials has barely changed. In fact, AstraZeneca has not launched a new chemical entity (NCE) since 2003, excepting Exanta which then had to be withdrawn. This is a trend that looks set to continue, as none of the three compounds AstraZeneca currently has registered for launch are NCEs; two are reformulations, a metered-dose inhaler of budesonide and a sustained-release Seroquel and the third is a refrigerator stable liquid variety of MedImmune’s FluMist. Unless some of its Phase II/III compounds can reach the market within the next few years, this could cause big problems for AstraZeneca’s revenue – and without income to support its ongoing R&D, the number of products it can investigate and so eventually bring to the market will also suffer. In a worst case scenario, a positive feedback loop of low profits reducing product development and thus further endangering income could ensue, which might prove hard for AstraZeneca to escape from.
The acquisition of specialty and biotech companies will most likely bear lucrative fruit further down the lineDespite these concerns however, it is not all doom and gloom on the horizon. As mentioned earlier, AstraZeneca’s acquisitions thus far have undoubtedly strengthened and bolstered its pipeline and overall business. The acquisition of specialty and biotech companies will most likely bear lucrative fruit further down the line. In addition to these longer-term prospects, AstraZeneca has already received some encouraging news already this year.
The company is collaborating with Pozen on the development of PN-400, an antiarthritic drug candidate that uses Pozen’s proprietary drug combination technology to combine Nexium with the antiinflammatory naproxen. Phase III trials were initiated in September and, if successful, the product could be launched in 2009/10; and with analysts already advising that the combination could prove very popular, it might offer an excellent near term prospect to generate needed income. PN-400 is designed for patients who require chronic NSAID treatment for arthritis pain and are at risk for NSAID-associated gastric ulcers, an extremely common side-effect. Another bright star is a single-pill combination of micronized fenofibrate (Abbott’s ABT-335) + Crestor (rosuvastatin calcium) for the treatment of hyperlipidaemia. Phase III trials for this product are under preparation and if all goes well, this could be a blockbuster for AstraZeneca, with sales potentially reaching over US$1 billion. The current market for cholesterol-treating drugs is valued at over US$21 billion; with Pfizer’s Lipitor alone generating US$12.9 billion in 2006. Again, if all goes well, a filing and launch are scheduled for 2009/10
Further news that positively affects immediate revenue was also reported recently. Results from the largest ever Phase III trial comparing two active treatments in pre-treated non small cell lung cancer patients have shown that AstraZeneca’s Iressa (gefitinib) demonstrated non-inferiority to docetaxel - the first time an EFGR inhibitor has done so. It also demonstrated better tolerability. Iressa is currently approved in 36 countries and sales in the first half of 2007 reached US$113 million.
